Law Gives Spouses Right to Know All the Financial Facts
Through generations of traditional marriage, the script has been familiar. Assured by her husband that “everything is taken care of” and told not to “worry her pretty little head” about money matters, the wife one day finds herself widowed or divorced--and destitute. Without her knowledge, their community property has been sold or squandered.
Dorothy Jonas, a feminist and former chair of the California Commission on the Status of Women, admits she was stunned when she learned that, if her husband had wished, “he could have completely run his business without any participation from me.”
When they began researching the subject in 1981, Jonas and her daughter, Bonnie Sloane, both married and veterans of the battle for an equal-rights amendment, said they knew “as much about property law as most people, which was nothing.” Jonas soon concluded that the homemaker was “the most discriminated-against worker in America.”
By 1984, Jonas and Sloane, both of whom live in Los Angeles, had formed an alliance that included family lawyers and women’s groups statewide to do something about legal discrimination that affects women’s property rights.
Their efforts paid off when, this July 1, SB 1071, carried by State Sen. Bill Lockyer (D-Hayward), became California law.
The law, first in the nation to address the problem, stipulates that:
--Either spouse must, upon request of the other, give full disclosure of community assets and debts throughout the marriage (including during divorce proceedings).
--A spouse who operates a business that is community property now has primary, rather than sole, management of the business, and the other spouse must be given written notification in advance of any “extraordinary” transactions involving substantially all of this property, including sales, exchanges or encumbrances.
--A spouse has the right to petition the court to order an accounting, to order access to community property and to determine ownership rights of this property.
--A spouse may bring action for damages when the other spouse’s breach of “good faith” has resulted in substantially reducing the claimant spouse’s half-interest in community property.
Pointing up the importance of this legislation, Jonas produces statistics showing that 75% of all elderly poor are women, that total average death benefits left by husbands to widows is $12,000, including lifetime income from Social Security, pensions and insurance, and that women and their children experience a 73% income decline following divorce, while men enjoy a rise of 42%.
But equally important, in the view of Jonas and Sloane, is what the law says about the status of married women. It spells out its intent to “promote an equal marital partnership protecting the rights and establishing the responsibilities of both parties equally.”
The two women, now collaborating on a book on marital property laws, emphasize they are neither anti-male nor anti-marriage but advocate marriages based on equality. Jonas believes this legislation could be “a tremendous boost toward dignifying the family.”
Under the old law, Jonas said, “the only way you could get an accounting (of community property) was if you filed for divorce or legal separation.”
State laws, even in California and the other seven community-property states, have tended to “reinforce the old way of looking at marriage--the husband does the money and the wife does the home,” Sloane said.
Laws Help Deception
Sloane added, “If you want to deceive, the laws make it perfectly possible to do so.” It is not unusual for the assets of a longtime marriage to be depleted when a husband in mid-life crisis begins spending lavishly on another woman.
Are today’s married career women so woefully uninformed about family finances and community property (defined as assets acquired during the marriage)?
Management women, still a distinct minority among working women, “do marry with a different set of expectations,” Sloane said, “and that’s where the hope lies” for change in states such as Oklahoma, where, by law, the husband is absolute “head of the household.”
As they push for marital property reform as a priority of the women’s movement nationwide, Jonas and Sloane know they have won only an opening skirmish in a long battle. In the vast majority of states, Jonas has found, “the manager spouse may hide assets and incur liabilities with no legal requirement to account for his actions.”
True stories illustrate what can happen:
“Betty,” a widow in her late 60s, was a mother and part-time secretary married to “Frank,” a garage mechanic. On retirement at 62, and over Betty’s objections, Frank plunged into the stock market with their modest savings. He kept assuring her, “Our money’s just fine.”
Suddenly widowed when Frank suffered a heart attack, Betty exhausted their joint savings to pay funeral expenses and bills. Then she learned that Frank’s investment in “glamour stocks” had gone sour and their $25,000 was now worth only $2,000.
“Kathryn,” in her 40s with two teen-age sons, enjoyed the upper-middle-class life style of a full-time homemaker with a self-employed husband. All she knew about business was that there was always money for expenses, cars and vacations.
When, to her shock, he filed for divorce after 16 years of marriage, he claimed “recent business reversals” had dried up community-property assets. Angry and skeptical, she refused his modest cash settlement and hired a lawyer.
But, learning she would have to pay out of pocket for a retainer to finance “discovery” proceedings and for appraisers and accountants, Kathryn decided to accept child support, two years of spousal support, one of the two family cars (monthly payments due) and $10,000 cash. Their home had been refinanced and her share, after sale, was only $5,000.
Kathryn and her sons now live in a one-bedroom apartment, spousal support has run out, and she has depleted her $15,000 on living expenses. Trying to find work, she is learning she is “too old.” Her ex-husband has remarried, the business is thriving.
The California law was not passed without debate.
The Assembly deleted a provision stipulating that both spouses join in approving extraordinary, large transactions involving community property. “A ghastly development,” Jonas said. “That hurt our intent.” As a result, she terms the law a “partial victory.”
Early opposition came from the executive committee of the Family Law Section, California Bar Assn., largely on the premise that marriages with so little communication had probably deteriorated beyond help.
Barbara McCallum, a Sacramento attorney, member of the Family Law Section and a leader in marital-property-law reform, sees a certain irony in the fact that some on the executive committee are younger women attorneys.
“They’ve never had to explain to their husbands where every dime of their money went,” she said, “and, to be perfectly honest, I don’t think they really understand the problem.”
She observed: “I am now hearing from businesswomen and women attorneys who don’t want to disclose information to their husbands. It boils down to power, family power. Up until recently, that power has for the most part been in the husband’s hands.”
To McCallum, the primary importance of the new legislation is that it establishes a climate of equality in marriage and it protects community assets before a divorce is filed. Of the latter she said, “That’s what I always call the black hole, where half the community property disappears between separation and filing.”
Carol Bruch, a professor at UC Davis School of Law, an expert on community-property laws and one of the consultants on drafting of the legislation, said, “Marital property has been the only area of the law in which the owner of the property didn’t have a right to ask where the property was or what they owned.”
She said the legislation “will probably have more effect in counseling sessions than anywhere else.” But, practically, she said, it does provide for things such as court-ordered access to information about a bank account that is in only one spouse’s name but contains co-mingled funds. (Sloane and Jonas had hoped to have access spelled out on the signature card).
Some attorneys have opposed the legislation, she said, on the basis that it might be used “as a subterfuge for the beginning of a divorce action” but she sees it, rather, as a vehicle for people who want to deal with financial matters during the marriage.”
Bruch pointed out too that the problem has not been strictly a “women’s problem.” She told of the case of an elderly man who discovered that for years his wife had been depositing his paychecks in an account in her name in trust for her niece. His wife was on the verge of senility and he wanted to establish that he was co-owner of that property.
With this new law, people will have “a chip in their corner” if the time comes when they need to ask about money matters.
For now, Jonas will accept “partial victory,” recognizing that “almost all divorced men feel they’re being taken to the cleaners, and many of our legislators are going through divorce.”
While Sloane, as chair, and other members of a National Organization for Women’s task force on rights of women in marriage have urged the national organization to adopt a resolution on the issue at the national convention in Philadelphia, which convenes this week. The goal would be to campaign for laws in every state that would insure wives and husbands equal ownership and equal control in the assets of a marriage.
